Why does my credit score go up and down

why does my credit score go up and down

Your actions with your credit accounts can cause changes to your credit score, causing it to go up when it’s a positive action, such as paying off debt. Or causing it to go down due to a negative action such as a late payment. While you can expect score fluctuations, constant changes can be a sign for concern. 

It’s essential to stay updated on your credit score; in general, your credit score is updated once a month, but that can increase depending on your activity.1 Knowing your current credit score can help you make adjustments to your finances. Higher credit scores can help you get a fast qualification and affordable loan terms. But if it happens often, you may be asking, “Why does my credit score fluctuate?” Learn about the credit score algorithm and how you can limit credit score fluctuation.  

What Are Credit Scores?

A credit score is a three-digit numerical representation of your financial history. As of April 2022, the national average FICO Score currently sits at 716.2 Individuals over the age of eighteen can apply for credit lines and loans to develop a starting point for a credit score. The management of financial accounts will determine a person’s credit score. 

Before creating the credit score in 1989, the three credit bureaus had tried to find a way to make lending decisions easier. Equifax hired the Fair Isaac Corporation (FICO) to help create a standardized credit scoring system, and the rest is history.  

What Are The Major Credit Bureaus? 

A credit bureau is a data-collecting agency. Creditors report information to credit bureaus, who then compile a credit history based on your financial activity. That information is also provided to creditors in the form of a credit report when you apply for a loan or credit line. 

There are three major credit bureaus: Equifax, TransUnion, and Experian. Thanks to the Fair and Accurate Credit Transactions (FACT) Act, you have the right to one free annual credit report from all three credit bureaus. You may also receive an additional free credit report if a creditor denies you within 60 days, you lose your job, you receive public assistance, or you are a victim of identity theft.     

Many creditors may or may not report to all three credit bureaus, so each credit report will contain different information. In order to report financial information, financial institutions must pay. Many creditors choose to only report to one or two credit reporting agencies due to the cost. 

A credit report contains a lot of information on your finances, such as:

Information on a Credit ReportDescription
1. Payment HistoryRecords of your payment behavior on credit accounts, including whether you have made payments on time or had late or missed payments.
2. Account BalancesThe current balances of your credit accounts, showing how much you owe on each account at a specific point in time.
3. Credit InquiriesA list of inquiries made when you apply for credit, including both hard inquiries (related to credit applications) and soft inquiries (related to background checks or credit monitoring).
4. Credit LimitThe maximum amount you can borrow on credit accounts, which is set by the creditor and determines your available credit.
5. Open and Closed AccountsInformation about active and closed credit accounts, detailing the types of accounts, dates opened, and dates closed (if applicable).
6. Debt CollectionsAccounts sent to collection agencies due to default, indicating debts that you have not paid and have been assigned to a collections agency for recovery.
7. BankruptciesRecords of bankruptcy filings and their status, including information on Chapter 7 and Chapter 13 bankruptcies, if applicable.

How Does a Credit Report Affect My Credit Score? 

Credit score fluctuations may worry you, but it’s entirely normal for credit scores to go up and down. If you see your credit score drop, it can be stressful when you don’t know why. The key to limiting credit score fluctuations is understanding how credit scores are calculated. A credit report provides essential information that directly affects your credit score. 

Your credit history is split into five categories that directly affect your credit score. Each category 

on a credit report is worth a small percentage of your total credit score calculation. 

Payment History 

The most critical financial category for credit scores is payment history. Your payment history accounts for 35% of your total credit score calculation. Ensuring that you make payments on time can help you maintain a good credit score. Missed payments can directly result in a credit score drop. 

A simple way to avoid missed or late payments is to sign up for automatic payments with your credit card company. Many creditors offer this payment method. Money is automatically withdrawn from your bank account on your due date. You will need to provide your bank account information to sign up for automatic payments. 

Credit Utilization Ratio

Your credit utilization ratio is the amount of debt you have compared to available credit. Credit utilization accounts for 30% of your total credit score. The more debt you have, the lower your credit score will be. To maintain a good credit score, keep your credit card balances low. 

Using more than 30% of your total credit limit can negatively affect your credit history. Keeping credit card balances low can be difficult when your credit limit is low. If your credit utilization ratio is high, consider asking your creditor for a credit limit increase. A higher credit limit can make managing your credit utilization ratio easier if you have already used most of your available credit. 

Length of Credit History

The age of your credit accounts makes up 15% of your credit score. The longer you maintain a credit account, the better your credit score will appear on a credit report. Suppose you successfully manage your revolving accounts. In that case, credit card companies may be more willing to qualify you for a new credit card account or a higher total credit limit. However, if you have missed payments on your credit report, the age of your credit card account may not be as significant. 

Credit Mix

Credit mix accounts for 10% of your credit score. Managing different types of financial accounts can be beneficial for credit scores. For example, having credit cards, installment loans (both secured and unsecured loans), a mortgage, auto loans, etc., may look better than a single option such as only credit cards. Borrowers should ideally have a mix of revolving credit and installment loans. 

Revolving credit is any form of debt automatically renewed once the debt is paid off. An installment loan is a loan that gives borrowers a lump sum of money which is repaid through scheduled monthly payments. Managing a mortgage or auto loan, in addition to credit cards, could reflect positively on your credit report. 

Credit Inquiries 

The number of credit inquiries you make directly affects 10% of your credit score calculation. If you have a bad credit score, you may have applied with many lenders in hopes of getting approval. However, making more than six credit inquiries within one calendar year can result in a negative credit score change. If you say, “I need a personal loan immediately,” go ahead and apply for one! As long as you keep your number of inquiries low, opening new accounts may not severely damage your credit score. 

Significant Credit Score Fluctuation May Be a Sign of Identity Theft

While you should expect credit score fluctuations, there may be cause for concern if your credit score changes dramatically. Identity theft has affected more than 60 million Americans and continues to be a common cyber threat. 

Identity theft is when someone uses your personal or financial information fraudulently. Fraudsters use your information to open new credit or utility accounts, make payments, steal your tax refund, and more. 

Warning Signs of Identity Theft

There are various warning signs of identity theft. If you detect any of the activities listed below, you can take steps to protect yourself. 

Incorrect Billing Statement

You should be checking your billing statements periodically to ensure there is no fraudulent activity. If you notice suspicious withdrawals or charges on a bank statement, you may be a victim of identity theft. Contact your bank as soon as possible and inform them of the fraudulent transactions on your financial account. 

Incorrect Credit Report

An incorrect credit report can be a sign of identity theft. Credit reports could have outdated information that needs to be corrected. But you should immediately contact one of the three credit bureaus if you notice new accounts you did not open. The credit reporting bureau will inform the other reporting agencies of the fraudulent activity. 

Missing or Unfamiliar Bills

If you usually receive paper bills, but then those bills go missing, you may be a victim of identity theft. Fraudsters will attempt to steal mail to obtain personal information that will allow them to open financial accounts in your name. If you start receiving bills for unknown accounts, that may also be a sign of identity theft. Contact the creditor right away and report the activity to the Federal Trade Commission. 

Calls from Debt Collectors

Suppose you receive calls from debt collectors about unfamiliar bills and credit card debt. In that case, a fraudster may have stolen your identity. Review your credit reports and contact the credit reporting agencies as soon as possible. You will need to dispute the fraudulent activity, so ensure you have the necessary information readily available. 

FAQS: Why Does My Credit Score Fluctuate?

How often should I check my credit scores to monitor fluctuations?

It’s advisable to check your credit scores at least once a year. However, if you’re planning significant financial moves or suspect any fraudulent activity, you might want to monitor it more frequently.

If I spot an error on my credit reports, how do I go about correcting it?

If you identify an error on your credit report or reports, you should immediately contact the credit bureau that issued the report. They are obligated to investigate and correct any inaccuracies, typically within 30 days

Do all financial activities impact my credit score equally?

No, different financial activities have varying impacts. For instance, payment history accounts for 35% of your score, while credit inquiries might influence only 10%. It’s essential to understand the weightage of each factor to prioritize financial actions.

How long does negative information, like late payments or bankruptcies, stay on my credit report?

Negative information can remain on your credit report for varying durations. Late payments might stay for seven years, while bankruptcies can remain for up to 10 years, depending on the type.

Can checking my own credit score too often hurt my credit?

No, checking your own credit score is considered a “soft inquiry” and does not impact your credit score. However, when lenders check your score for lending purposes, it’s a “hard inquiry” and might affect the score slightly.

What steps can I take to improve my credit utilization ratio?

To improve your credit utilization rate, you can pay down existing balances, avoid accumulating more debt, or request an increase in your credit limit. Keeping your utilization below 30% is generally recommended.

If I become a victim of identity theft, what immediate actions should I take to protect my credit?

If you suspect identity theft, immediately alert the credit bureaus to place a fraud alert on your credit reports. This makes it harder for thieves to open more accounts in your name. Additionally, report the theft to the Federal Trade Commission and consider filing a report with your local police.

Conclusion With CreditNinja

Credit scores drop for a variety of reasons. Understanding how credit scores are calculated can help you prevent a significant credit score drop. For example, avoiding late or missed payments can help you maintain a stable credit score that doesn’t go up and down. At CreditNinja, we want to highlight the importance of reviewing your credit reports, as that can help you prevent identity theft and better understand your credit position. 


  1. Constantly checking your credit score? Here’s how often it updates | CNBC
  2. 2022 Credit Trends in the US by City and State | FICO
  3. What is a Credit Bureau?  | Equifax
  4. When Did Credit Scores Start? |
  5. 9 warning signs of identity theft and what to look for | Norton

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